BB Declares Interest Rate Policy For Bank Loans

The interest rate on bank loans for April based on the ‘Six-Months Moving Average Rate of Treasury Bills’, SMART system has been announced by Bangladesh Bank. 

The Banking Regulation and Policy Department of Bangladesh Bank (BB) issued a circular in this regard on Sunday. 

The SMART increased by almost 1 percent to 10.55 percent in March, from 9.61 percent in February and 8.68 percent in January.

Banks will be allowed to add a maximum 3.0 percent to the SMART number when signing loan agreements in April, down from 3.5 percent in March.

As a result, the interest rate on bank loans will be charged a maximum of 13.55 percent in April, while the interest rate on consumer loans will be a maximum of 14.55 percent as a bank can charge a 1.0 percent supervision fee for consumer loans.

The interest rate on bank loans in March was 13.11 percent, while it was 14.11 percent on consumer loans. Before that in February, it was 12.43 percent and 13.43 percent. In January this interest rate was 11.89 percent and 12.89 percent.

As the SMART rate increased more than expected in March, the BB reduced the 'SMART' margin rate that banks are allowed to add by 0.50 percent in the interest of consistency with the monetary policy. The BB cut the margin by 0.25 percent in February. 

As per the new guidelines, the margin added for pre-shipment export loans and agricultural and rural loans will be a maximum of 2.0 percent in April, which was 2.50 percent in March.

Generally, the loans taken from banks for purchasing personal and consumer goods such as car loans, housing loans, and education loans, including refrigerators, TVs, computers, etc., are consumer loans.

Talking to UNB, executive director of the Policy Research Institute Dr Ahsan H. Mansur said that the central bank has no choice other than increasing interest rates to control inflation.

"The interest rate hikes would continue till the inflation rate comes down to 5-6 percent, only then will the interest rate stabilise," he explained.

During this period, industries and personal borrowers will suffer, but they must face the reality. Through this hardship, the economy will gain strength and stability._UNB